Gross mortgage lending in January jumps by 21%

Gross mortgage lending surged by 21% on an annual basis in January to hit £17.9bn, making it the best start of the year since 2008 according to the Council of Mortgage Lenders (CML).

However January’s total was 9% down December’s tally of £19.8bn.

CML economist Mohammad Jamei said: “Lending started the year on a positive note. UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand.

“We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market.”

Howard Archer, chief UK and European economist at IHS Global Insight believes house prices will rise by around 6% over 2016 amid healthy buyer interest, which he said could be fuelled by increased expectations that interest rates will not rise this year and a relative shortage of properties.

John Eastgate, sales and marketing director of OneSavings Bank, believes the “sluggish start to 2016” tells us more about a seasonal lull in buyer activity at the end of last year, than it does about any long term indication of the market’s health.

He added: “Conditions for mortgage borrowers are, if anything, likely to improve, with the prospect of interest rate rises pushed further out thanks to the economic uncertainty that has plagued markets since January. On top of that, we have moderating house price inflation and strong employment data.

“The caveat is that we still need to see more on the supply side; house sales are a third lower than their pre-crash levels and we still fail to build enough.”